Age-productivity profiles of entrants and exits: evidence from Canadian manufacturing

Using the Longitudinal Annual Survey of Manufacturers for Canada, this paper aims to better understand the productivity dynamics of entrants and exits as well as the factors associated with their productivity performance. It shows that entrants and exits are lower in labour productivity relative to continuing plants partly because they are smaller in size, less capital intensive, and less associated with exporting, being foreign-controlled and belonging to multi-plant firm structure. It also finds that after controlling for those factors, surviving entrants are less productive when they enter and that they improve their productivity over time to become as productive as continuing plants by around year five after entry. Exits, on the other hand, are found to be less productive than continuing plants after controlling for those factors, and the gap becomes larger as they get closer to exit.